With Tesco, the Post Office, Marks & Spencer and many more clambering to sell you a mortgage, there are more places than ever to pick up a home loan, but make sure you understand whether you are receiving advice or a sales pitch.
The Post Office has offered home loans for years, but is only now in the process of introducing “mortgage specialists” to many of its branches. However, contrary to how it might sound, these specialists will not tell you which home loan is the most suitable – only information on the Post Office’s own product range.
When taking out a mortgage you may be offered an information-only service, fully independent advice, or something in between.
If you are in the process of taking out a mortgage here is what you should watch out for.
Mortgage specialists at the Post Office and at many high street banks can guide you through the range of products that they offer without giving you advice on which is the most suitable for you. This can be confusing and the City watchdog says that many customers who have had an “information-only” discussion believe they have received advice . That is why the Financial Services Authority (FSA) is looking at changing these rules to make all mortgage sales “advised”. These proposals are still under consideration and will not be implemented until next summer at the earliest.
Tied or Multi-Tied Advice
Some banks and building societies offer ” advice “, even though they will only offer you access to their own range of products that may not be the cheapest or the most suitable on the market. The recommendations that they make are not independent or impartial. These advisers are known as “tied” or “restricted”. Be aware that some mortgage brokers are not fully independent and select products from a limited panel of different lenders.
If you want impartial advice , choose a mortgage broker that offers products from across the whole market. You can find a broker in your area by searching on Unbiased.co.uk, the independent advice website. Some brokers charge a fee, while others are paid commission by the lender. Some do a mixture of both.
To be able to call themselves “independent”, brokers must offer the option for borrowers to pay a fee and avoid commission altogether. However, brokers who are not labelled independent but are whole-of-market are still obliged to recommend the best deal for you and not the one that pays the most commission.
Some lenders, such as HSBC, first direct and the Post Office, do not market their products through brokers, so even if you are seeking advice, you should also check on price comparison websites.
Brokers that offer whole-of-market mortgage advice may still be tied to an individual insurer for the life cover that is usually sold alongside the loan . If this is the case, check the quote against deals available on price comparison sites.
If you are not happy with the advice you receive from a broker, you should first complain to the business directly and if you are not satisfied with the outcome you can take the matter to the Financial Ombudsman Service. Check that your broker is authorised by searching the FSA’s register www.fsa.gov.uk/register/